Saskatchewan Budget: COVID-19 Factor in $2.4B Deficit

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Saskatchewan Finance Minister Donna Harpauer takes questions from reporters before releasing the province’s budget at Saskatchewan’s Legislative Building in Regina on Monday, June 15, 2020. THE CANADIAN PRESS/Mark Taylor

The Saskatchewan government is predicting the COVID-19 pandemic will result in a deficit of $2.4 billion but says it won’t cut programs and services.

Finance Minister Donna Harpauer tabled a full 2020-21 pre-election spending plan Monday after submitting only expense estimates in March. Officials said at the time that economic shutdowns to prevent spread of the novel coronavirus, along with a fall in oil prices, made it too unpredictable to properly forecast revenues.

The government now expects to take in $1.2 billion less than the previous year. It forecasts revenues to be at almost $13.7 billion, while spending is earmarked at $16.1 billion.

 

Harpauer characterized the shortfall as a “pandemic deficit” rather than a larger, structural one.

Saskatchewan is the first province to build a budget around the pandemic. It’s also one of the largest deficits in the province since the early 1990s.

“The uncertainty for sure is how different countries open and how they open up their economies and their ability to purchase products,” Harpauer told a news conference.

“We have what the world needs and that has not changed … Food, fuel and fertilizer are still going to be our staples.”

Harpauer said the province should see revenues rebound and the government will be able to return to balance in the coming years without having to slash programs and services, she said.

She said a balanced budget may take three to four years, and she’s optimistic it can be done without increasing the provincial sales tax.

“It’s not going to be easy” and there’s going to have to be restraint, she said.

While the government is committed to its collective bargaining agreements, there are likely going to be more zeros in future negotiations and hiring freezes could be on the table, Harpauer added.

Prior to the global health crisis, Premier Scott Moe had said his Saskatchewan Party government would be presenting a balanced budget with a modest surplus before a provincial election slated for October.

Preliminary figures released Monday show the 2019-20 fiscal year ending with a $319-million deficit because of the economic deterioration in the last quarter.

NDP Opposition Leader Ryan Meili had pressed the government to table a budget ahead of the election. He said it’s concerning that the forecasts don’t extend beyond next March, as is typically the case.

“They are holding back a story that is so familiar,” he said. “They run on a sweetheart budget before the election and then they come in with a budget to deeply cut services, sell off Crowns.”

Meili also said the budget does not address the need for child care in the province to get people working.

The government plans to add another $3 billion to Saskatchewan’s debt load, with $1.9 billion of borrowing tied to pandemic-related initiatives.

Included in the budget is an extra $2 billion that Moe promised in May for its existing two-year capital plan. It is to be spent on infrastructure projects and highway upgrades to create jobs and stimulate the economy.

 

Harpauer also said the budget forecasts more than $500 million in new expenses related to programs to support people through the pandemic, including previously announced initiatives such as $50 million in help for small businesses.

The province said $200 million has also been set up as a contingency to deal with a possible resurgence of the virus later this year.

This report by The Canadian Press was first published June 15, 2020

Stephanie Taylor, The Canadian Press

 
   

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